Payment Radar
Bank of Canada Holds Policy Rate at 2.25%: What It Means for Merchants
The Bank of Canada held its policy rate at 2.25% on September 2, 2026, keeping the rate unchanged for the third consecutive meeting.
What changed
The Bank of Canada held its policy rate at 2.25% on September 2, 2026, keeping the rate unchanged for the third consecutive meeting. The decision was driven by a broadening economic recovery and inflation hovering around 3%, though upside risks from Middle East energy prices and new US tariffs remain. The Bank of Canada is the country’s central bank responsible for setting monetary policy and managing the national currency.
Why a business should care
For merchants, this means borrowing costs for variable-rate debt, inventory financing, and payment terminals will remain elevated, while consumer spending stays solid but sensitive to rate levels. The cost of accepting card payments may not drop, as interchange fees and processing costs are not directly tied to the policy rate but are influenced by broader financial conditions. The most significant practical effect is that merchants carrying variable-rate debt or financing inventory will continue to face elevated borrowing costs, impacting cash flow and pricing strategies.
Who it affects
This decision primarily impacts Canadian merchants, particularly those carrying variable-rate debt, those financing inventory or terminals, and those whose customers are rate-sensitive. The retail, e-commerce, and payment processing industries are directly in the crosshairs.
What to consider doing
Pull your current variable-rate loan agreements and inventory financing contracts this week. Compare the interest rates and terms against your current cash flow projections to identify any immediate refinancing opportunities or budget adjustments needed to accommodate the continued elevated borrowing costs.
Uncertainty and risks
Upside risks from Middle East energy prices and new US tariffs remain, which could alter the economic landscape. Consumer spending sensitivity to rate levels means demand could shift if conditions change. The next rate decision is scheduled for October 28, 2026, so merchants should prepare for potential changes in borrowing costs and consumer demand in the coming weeks. Elevated borrowing costs for variable-rate debt, inventory financing, or payment terminal leases remain a persistent risk.
Comments